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Friday, April 28, 2017

Back in February, there was little chance that our Florida legislature would legalize daily fantasy sports (DFS), held illegal by the Attorney General of Florida since 1991. Louche lobbyists with their fists wrapped around PAC cash oozed into The Governors Club, Inc. and other locales where legislators get "persuaded." Now, mutatis mutandis, mirabile dictu, AP reports, there's a likelihood DFS legalization, without any regulation -- "Open Season" for internet gambling -- might pass by May 5 session end:

Florida legislators may reach a deal this year on the murky legal status of fantasy sports in the state.

House and Senate Republicans negotiating a comprehensive gambling bill that focuses primarily on casino gambling are including in the legislation proposals regarding fantasy sports.

Senate negotiators on Thursday offered their support for a House bill that says betting on fantasy contests would be allowed as long as the sponsor of the contest is not a participant.

Florida's attorney general back in 1991 issued an opinion that football fantasy leagues were a form of illegal gambling. But fantasy leagues have continued to flourish and expand since then, including the creation of daily fantasy leagues.

Some Republican legislators tried unsuccessfully last year to legalize fantasy contests.

The House gaming bill and Florida fantasy sports

That comes in the context that the Senate already has its own version of a gaming bill, which does include paid-entry fantasy sports legalization and regulation. The fact that the two bills do not mesh in regards to fantasy sports — or on a lot of other topics — calls into question any gaming measure getting through the legislature this year.

Last month, House Speaker Richard Corcoran suggested his chamber’s approach to gambling would be different.

“I’ve seen the (Senate) bill, and look, it’s not where we’re at,” Corcoran told reporters. “The three things we’ve said are, it has to be a contraction (of gambling) … we want a constitutional amendment that bans the expansion of gaming; the Senate’s said they have no interest … and we have courts that keep encroaching upon our ability to make those decisions.”

Whether the Senate and House can iron out differences in those bills — and whether the House will add fantasy sports to the mix — remain open questions.

Despite the fact that most operators serve the state, the current legality of DFS is certainly not an open-and-shut case. Florida — along with Texas, Illinois and California — remain the most important states in terms of DFS becoming regulated and gaining legal clarity.

Florida To Take A Second Swing At Daily Fantasy Sports Legality, With No Regulation

Florida is one of a large swath of states where lawmakers introduced daily fantasy sportslegislation that didn’t become law in 2016. Eight states did move to legalize DFS last year.

In 2017, Florida will likely be one of the states the DFS industry focuses on most in its quest for legal clarity around the US. A new bill signals the start of that effort.

The new Florida fantasy sports bill

H 149 (summary here, full text here) was introduced last week by State Rep. Jason Brodeur.

The bill clarifies the legality of DFS only, and does not regulate the industry in Florida.

The bill is just two pages. It defines a “fantasy contest” and a “fantasy contest operator,” much like it is defined in the federal UIGEA and a host of state laws. Then the bill goes on to say contests and operators are not subject to regulation and are exempt from several parts of the state code, mostly pertaining to gambling and games of skill:

EXEMPTION.—A fantasy contest conducted by a fantasy 35 contest operator is not subject to regulation by the Department 36 of Business and Professional Regulation and is not subject to s. 37 849.01, s. 849.08, s. 849.09, s. 849.11, s. 849.14, or s. 38 849.25.

If at first you don’t succeed….

Legislation last year also sought to regulate the industry, however. It’s not clear why the DFS effort this year is starting without a regulatory component.

Like legislation anywhere, it’s very easy to introduce a bill. Moving it forward is an entirely different matter. Seeing as a bill that regulated DFS received pushback in 2016, a bill that provides no oversight would seem to have an even more uncertain future.

The other moving parts in Florida

There are lots of things to consider in Florida regarding DFS, outside of the bill itself:

The Seminole tribe, which has a gambling compact with the state, has set itself up as an opponent of DFS in the past.

It the bill does pass, it would be open season in Florida

The wording of the DFS bill in Florida is such that it would authorize things more akin to sports betting than most of the DFS industry as currently situated.

So far, similar language in other states has not been leveraged by an operator to offer what amounts to prop bets based on player performances under a DFS law. But such a development would seem to be just a matter of time, not a matter of “if.”

A large state that legalizes such activity for operators — with no regulation and no barrier to entry — would seem to be a good entry point.